Why Wipro Share Price is Falling

The IT sector in India is a cornerstone of the country's economy, renowned for its innovation, extensive talent pool, and global service delivery capabilities. Companies like TCS, Infosys, and Wipro are at the forefront of this sector, driving technological advancements and economic growth.

Wipro, in particular, is a major player in the Indian IT landscape, providing a range of services from software development to consulting.

However, 2024 has not been particularly favorable for the company. While its share price has increased by 7.6% this year, this growth is modest compared to industry expectations and the performance of its peers.

Despite this slow yet steady climb, Wipro has just faced a significant setback. In a single day, the company's stock tumbled by 7.8%, erasing a substantial portion of its yearly gains. This sudden drop has raised concerns among investors.

Let's delve deeper and explore the potential factors behind this unexpected plunge.

Weak Quarterly Results

Wipro's Q1 FY25 revenue and Q2 FY25 guidance were below expectations. Its revenue in constant currency declined for the sixth consecutive quarter.

This is concerning compared to competitors like TCS and Infosys, which reported 2-3% QoQ growth.

The IT company's consolidated revenue declined by 1.1% QoQ to Rs 219.6 billion (bn). Growth during the quarter was driven by top-25 clients with a 1.3% sequential increase.

BFSI saw over 0.5% QoQ growth, while energy, utilities, and manufacturing declined by 6.3% and 3% QoQ, respectively, due to large project closures.

The company's earnings before interest and tax (EBIT) margin was 16.4% for the quarter. This was driven by improved utilisation, fixed price productivity, and overhead optimisation.

It reported a net profit of Rs 30.4 bn for Q1 FY25, up 5.2% from the previous year and 6.2% sequentially.

Due to muted results, the company revised its Q2 FY25 revenue guidance, suggesting a potential decline of 1% or slight growth up to 1%.

Overall, the company failed to demonstrate a positive recovery, due to the miss on revenue growth, muted growth guidance for Q2 FY25, and a decline in large deal total contract value (TCV), despite securing a significant mega deal.

What Next?

Wipro aims to achieve several key milestones by 2025. These targets include a significant increase in market leadership and a focus on strategic growth.

The firm is prioritising its efforts in sectors and geographies that promise the highest returns. The primary regions of focus are the Americas, Europe, and APMEA. The company aims to leverage its competitive strengths to capture a larger market share in these regions.

To drive growth, the company is aligning its organisation around key customers. This involves investing early in large potential customers within priority sectors.

Each major account is managed by a Global Account Executive (GAE), supported by industry and technology specialists located close to the clients. This approach ensures that the best resources are available to foster growth in these accounts.

Additionally, the company is emphasising large deal origination. It is leveraging relationships with advisors, partners, and other stakeholders to secure significant contracts.

The company would focus on winning large deals through dedicated pursuit teams, which are supported by investments in differentiated solutions and commercial constructs.

The company has outlined several strategic initiatives to achieve its goals. The firm is focused on driving market leadership in prioritised sectors and geographies.

Mergers and acquisitions play a crucial role in this strategy, helping the company quickly build capabilities and expand its market presence. Recent acquisitions in the US, Europe, Latin America, Australia, and India have strengthened local presence and enhanced capabilities.

The company is co-investing and co-creating with partners to drive demand. Collaborations with major technology leaders like AWS, Microsoft, Google, Salesforce, SAP, ServiceNow, and NVIDIA are crucial for delivering cutting-edge solutions and business value.

Strategic partnerships are being leveraged by the company for cloud-led transformations, AI, machine learning, and industry-specific solutions.

The company aims to stay at the forefront of innovation by focusing on AI and generative AI, providing clients with advanced solutions that mitigate risks and deliver real business value.

Talent development is also a key priority for the company, with an emphasis on building a simplified operating model that supports large-scale talent development.

Sustainability remains a critical focus, with targets to achieve Net Zero on Scope 1, Scope 2, and Scope 3 emissions by 2040.

How Wipro Share Price has Performed Recently

In the past five days, Wipro share price tumbled 9.5%. In the past month it fell its share price is up 3.3%.

In 2024, so far its share price is up 6.2% and it went up 25.4% in the last year.

The stock touched its 52-week high of Rs 580 on 19 July 2024 and a 52-week low of Rs 375 on 26 October 2023.

About Wipro

Wipro is one of the leading global IT, consulting and business process services companies.

Wipro was incorporated in 1945 as Western India Vegetables Product Limited. It was a consumer care product manufacturer till 1980 after which it diversified into the IT services business.

With effect from 1 April 2012, the company demerged its other divisions (consumer care and lighting, medical equipment, and infrastructure engineering) into a separate company called Wipro Enterprises.

Wipro's operations can be broadly classified into IT Services, IT Products, and India State Run Enterprise.

For more details about the company, you can have a look at Wipro Company fact sheet and Wipro quarterly results on our website.

For a sector overview, you can read our IT sector report.

You can also compare Wipro with its peers on our website:

Wipro vs TCS

Wipro vs Infosys

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